Professional Documents
Culture Documents
2014
Innovation Report
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A Benchmark Study of Top Companies
in New Product Innovation
An E-Report by
executive summary
in
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4 Key Learnings:
1.
The impact of environment is bigger than you thinkWe found that top-performing companies are not just giving
their innovators more intellectual resources (budget, data, technology) for innovation, they are also giving them
more emotional resources (guidance, support and running room). They are less likely to encumber their innovators
with frustrating internal politics and more likely to put the full skills and talents of their people to use. Innovators are
returning the favor by dedicating more to the job and staying loyal to the company.
2. Knowing your consumer is no longer enough to winTop-performing companies are doing a better job of understanding consumer needs through research and data. Thats not surprising. But what is surprising is that they are
also providing innovators with data to benchmark ideas and innovations against competitors, which enables them
to establish differentiated propositions for their products.
3. When it comes to collaboration, not all input is created equalWhile its important to involve consumer insights,
brand and R&D in the innovation process, involving sales can make a big difference. In fact, top-performing
companies are leveraging sales more often in the process from ideation to package design and price considerations.
Sales provides knowledge about competition and consumers, which pays dividends at all stages.
4. Greater risk taking leads to greater rewardsOne important characteristic that distinguishes top-performing
companies is their creativity. Top-performing companies are more likely to encourage their innovators to take
creative risks and try out novel ideas. As a result, they are highly effective at generating the level of breakthrough
thinking required for consistent innovation.
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Areas for Improvement
Through the study, we also learned that CPG companies have much to improve when it comes to
enabling and managing innovation. For example,
overall satisfaction with collaborative practices in
companies is currently very low among front-line
innovators (76 percent believe there isnt enough).
in
Have worked on a new product innovation project within the past year
Rank below the C-level (VP, director, manager or analyst) to represent an intimate,
day-to-day perspective of the process
Respondents represented a wide spectrum of the consumer packaged goods industry, including food,
beverage, personal and home products, and also some retail. Company size was evenly balanced, with
58 percent of respondents from companies worth $10 billion or larger and 42 percent from companies
below that threshold. A wide range of job functions within innovation were also represented (Fig 1).
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Job Roles of Participants in the Survey
Fig 1
39%
26%
SALES/TRADE
1 1%
FINANCE/ACCOUNTING
OTHER
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IS
CO
MP AC
ET CE
ITI SS
VE TO
AN
AL
YS
Dimensions of
Innovation
CO
NS ACC
UM ES
ER S T
IN O
SIG
HT
S
ENCOURAGEMENT
OF CREATIVITY
D
EE
BR GY
OF LO
ST NO
BE ECH
T
Fig 2
T
EN N
EM TIO
AG RA
UR BO
CO LA
EN COL
OF
EFFECTIVE
LEADERSHIP
www.affinnova.com
in
Quartile
4
Bottom
Quartile
Cutoff
Quartile
3
15%
----------------
Fig 3
Quartile
1
55%
Top
Quartile
Cutoff
Looking at the top-performing quartile and the bottom-performing quartile, we then sought to identify
patterns. Did Top Performers share something in common that contributed to their high new-product
success rates?
Fig 4
PERCENTAGE OF ALL
RESPONDENTS
over
$20 billion
32%
under
$1 billion
31%
$1-20
billion
37%
PERCENTAGE OF TOP
PERFORMERS
over
$20 billion
29%
under
$1 billion
46%
$1-20
billion
25%
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Finding #2: Structure Isnt the Difference
Fig 5
PERCENTAGE OF ALL
RESPONDENTS
completely
structured
60%
no
structure /
semi
structured
40%
PERCENTAGE OF TOP
PERFORMERS
completely
structured
63%
no
structure /
semi
structured
37%
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What Matters: Environment and Behaviors
If size and structure didnt make a difference, what did? Comparing Top Performers against
Bottom Performers in the six areas measured by our study, we identified four factors that lead to
new product development success.
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success factor #1
in
TOP PERFORMER
BOTTOM PERFORMER
Fig 6
52%
Bottom
Performer
Top
Performer
[Very Confident/
Confident]
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Top-performing companies are
distinguished by good leaders
Q. How would you classify your confidence in
your companys approach to providing clear
direction from leadership on innovation strategy
and practices?
Fig 7
64%
[Very Confident/
Confident]
43%
Bottom
Performer
Top
Performer
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success Factor #2
in
Consumer Understanding
consumer needs.
product development?
Fig 9
81%
60%
Bottom
Performer
competitive advantages/
weaknesses to ensure successful
new product development?
Fig 10
79%
61%
[Very Confident/
Confident]
Top
Performer
Competitive Understanding
Fig 8
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Consumer-Centricity
......................
....................................................................
Bottom
Performer
Top
Performer
81%
63%
[Strongly
Agree/Agree]
[Very Confident/
Confident]
Bottom
Performer
Top
Performer
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Current Insight Gaps
Respondents felt that more consumer and
competitive insights were needed throughout the
entire innovation cycle but were most needed
in the early strategic planning, ideation, concept
IDEATION
CONCEPT
Bottom Performers.
PRICE
53%
53%
STRATEGY
More Consumer
Insight Needed
More Competitive
Insight Needed
47%
45%
39%
38%
39%
30%
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success factor #3
in
[Very Confident/Confident]
Collaboration Effectiveness
Fig 12
77%
64%
[Very Confident/Confident]
Knowledge Sharing
Fig 13
cross-functional collaboration to
product development?
development?
Bottom
Performer
56%
67%
Top
Performer
Bottom
Performer
Top
Performer
....................................................................
Inviting Sales to the Party
Looking deeper into who was
Sales Involvement
trade participating?
Fig 14
and relevant.
54%
37%
27%
24%
18%
12%
STRATEGY CONCEPT
Bottom Performers
25%
30%
PACKAGE
DESIGN
PRICE
Top Performers
....................................................................
Collaboration Improves Innovation Performance
In a separate study, published in
success factor #4
in
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Creativity
Q. How confident are you in your
companys approach to encouraging
breakthrough creative thinking to ensure
successful new product development?
Fig 15
65%
[Very Confident/
Confident]
30%
Bottom
Performer
Top
Performer
.......................
Risk Taking
Q. How strongly would you agree with
the following statement: Creative risk
taking is encouraged and rewarded.
Fig 16
40%
[strongly agree/
agree]
29%
Bottom
Performer
Top
Performer
....................................................................
Creativity Stops at Ideation
Q. Where in the current process is the most creative risk-taking or outside-the-box thinking being encouraged?
Fig 17
54%
IDEATION
20%
6%
STRATEGIZE/IDENTIFY OPPORTUNITIES
CONCEPT SCREENING
and bottom-performing
organizations reported that
the most creative, outside-the-
5%
PRODUCT/SENSORY TESTING
5%
PACKAGE DESIGN
3%
PRICE SPECIFICATION
3%
LAUNCH PLANNING
3%
PORTFOLIO IMPLICATIONS
2%
OTHER
Recommendation
in
Inadequate tools: 75 percent believe their companies are using outdated technology for innovation.
Slow processes: 49 percent feel that their companies cant move fast enough to keep up with competitors and
the pace of the marketplace.
Lack of creativity: 62 percent say creative risk taking is not supported by their companies, limiting breakthrough
ideas.
Subjective decision making: 55 percent believe that internal politics not datais guiding most new product
decision making.
Limited customer insight: 66 percent believe their company isnt doing enough to understand consumers and
map product back to their needs.
For CPG leaders and executives, these findingsas well as the characteristics of Top Performersoffer
a general prescription for improving innovation practices. But the best insight can only come from
measuring within. Instead of relying on general industry data, leaders should look to better understand
how their innovators specifically feel about processes and seek to identify the constraints affecting
performance as well as morale.
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IS
Dimensions of
Innovation
D
EE
BR GY
OF LO
ST NO
BE ECH
T
CO
NS ACC
UM ES
ER S T
IN O
SIG
HT
S
A
PE CC
TIT ES
IV S T
EA O
NA
LY
S
CO
M
ENCOURAGEMENT
OF CREATIVITY
F
TO
EN N
EM TIO
AG RA
UR BO
CO LA
EN COL
EFFECTIVE
LEADERSHIP
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